Kulongoski will let tax referendum play out with voters

In his post-session public appearances, Gov. Ted Kulongoski has maintained his opposition to a tax-increase referendum that could blow an $800 million hole in the budget legislators balanced last week.

But the Democratic governor — who critics say abandoned an earlier pledge to “live within our means” — has not specified how active he will be in efforts to quash the referendum’s chances of getting on the Feb. 3 ballot or succeeding with voters if it does.

He told The Oregonian’s editorial board Tuesday that he is all for a “democratic process” that allows opponents and proponents to “fight like heck” at the ballot. But he said he wants to make sure Oregonians see the tax debate as more than a pocketbook issue.

“My involvement is working very, very hard to explain to people that this is about education, the economy and our future,” Kulongoski said. “It’s what you’ll hear from me now until this is resolved.”

Discussion after longest session Almost a week after the state’s longest legislative session ended after 227 days, Kulongoski discussed the tax increase as well as longer-term tax overhaul that could help the Legislature avoid the uncertainty prompted by the increase.

Kulongoski has assigned David Yaden, a longtime policy analyst, to be his point man in a group established to study what some in Oregon call an uneven tax structure. It will parallel a legislative plan to have a special session in June 2004 to consider overhauling the state’s tax structure.

Any new tax format, Kulongoski said, must involve regular Oregonians hashing out a broad range of related issues, including government accountability, the relationship between local and state governments, and how the tax structure drives the economy.

Most of the discussion Tuesday centered on the $800 million tax increase legislators narrowly approved to help balance an $11.6 billion state budget for 2003-05.

The plan imposes a three-year income tax surcharge, increases corporate income taxes and reduces the discount for early payment of property taxes. Opponents of the increase filed a referendum Friday with the secretary of state and could start collecting signatures this week.

Role in tax battle They must collect 50,420 valid signatures of registered voters by Nov. 26 to qualify the tax question for the ballot. Referendum co-sponsor Russ Walker said he hopes the governor takes a visible lead in the tax battle.

“I think it’s about time he got out in front and is vocal about his support for new taxes. It’s time he showed the voters his true colors,” said Walker, Northwest director of Citizens for a Sound Economy, a Washington, D.C.-based group that lobbies against higher taxes.

Kulongoski said his promise not to support higher taxes was made before revenue projections plummeted and reduced the money available for the 2003-05 budget from about $11.4 billion to $10.3 billion.

He said he expects moderate Republicans who pushed for the tax increase to help boost the plan in the court of public opinion.

“This time, it was their product. They worked on it, and they owned it,” Kulongoski said. “Will they stand up? I think they will. They’ve got a lot on the line.”

The governor also talked about the session’s shortcomings, including the failure to allow school districts to pool their health insurance, to find stable financing for the state highway patrol and to set laws governing collective bargaining by farm workers.

He said he regretted that lawmakers balanced the budget by increasing lottery revenue by $67 million. But that’s better than the $250 million originally considered by legislators, he said.

Health insurance issue On the school health insurance proposal, Kulongoski dinged two Senate Republicans he declined to name who he said backed away from it under pressure from an interest group. The bill would have saved $100 million every two years, he said.

“I have a hard time understanding how Republicans can yell at me about efficiencies . . . and the one tangible thing, they turn their backs on,” he said.

During the Labor Day weekend, Kulongoski signed a batch of budget-related bills to keep state government running, as well as a successor to the state’s fiscally short pension system.

But he has not signed several contentious bills, including proposals to raise the speed limit on rural interstates and to revamp ethics laws so families of public officials can receive free trips from lobbyists.

MardiLyn Saathoff, the governor’s general counsel, said last week that Kulongoski hasn’t decided whether to sign the ethics bill or to let it become law without his signature. She is urging him to clarify current ethics laws, which she says are confusing.

“In my mind, it’s hard to be accountable when you don’t know what the expectation is,” Saathoff said.

Kulongoski embarks today on a two-week camping trip with his wife across the state. Janie Har: 503-221-8213; janiehar@news.oregonian.com